Caterpillar office raided by tax agents

Caterpillar shares headed for the steepest decline in eight months as the biggest maker of machinery for mining and construction had its Illinois offices raided by federal tax and financial officials.

Searches were conducted Thursday in Peoria, East Peoria and Morton by the IRS, the Federal Deposit Insurance Corp. and the Commerce Department, said Sharon Paul, a spokeswoman for the U.S. Attorney's Office for the Central District of Illinois.

Declining to give details on the nature of the raid, she said that in other cases the U.S. Attorney's Office has dealt with the IRS's Criminal Investigations unit and the Commerce Department's Office of Export Enforcement. Caterpillar has a financial unit that lends to customers.

Caterpillar confirmed by email the presence of agents in some of its Peoria-area facilities, without elaborating. 'Caterpillar is cooperating,” it said.

The stock fell 5.1 percent to $93.60 at 1:05 p.m. Eastern Time in New York, heading for the biggest decline since June.

Although it isn't clear what the focus of the raids are, the company disclosed in an annual filing last month that it received a grand jury subpoena from the U.S. District Court for the Central District of Illinois on Jan. 8, 2015.

The subpoena requested documents relating to, among other things, financial information on U.S. and non-U.S. Caterpillar subsidiaries. That included undistributed profits of non-U. S. subsidiaries and the movement of cash among U.S. and non-U. S. subsidiaries, the company said.

The manufacturer said it got additional subpoenas relating to this investigation requesting more information on the purchase and resale of replacement parts by Caterpillar and non-U. S. Caterpillar subsidiaries and dividend distributions of certain non-U. S. Caterpillar subsidiaries. The company said in the filing that it believes this matter 'will not have a material adverse effect on the company's consolidated results of operations, financial position or liquidity.”

'I can confirm that our agents are on-site conducting official business,” said Justin Cole, spokesman for the IRS Criminal Investigation division. 'I'm unable to give any more details.”

A spokesman for the FDIC declined to comment.